Page 7 - NorthAmOil Week 44

NorthAmOil COMMENTARY NorthAmOil
third quarter of 2018.
On November 4, it was reported that Chev-
ron had filed 21 new horizontal drilling permits in the Texas portion of the Permian, illustrating its continued push for growth in the Permian. This comes as the company targets 600,000 boepd of Permian production by the end of 2020 and 900,000 boepd by the end of 2023.
Warnings
News of the two super-majors’ progress in the Permian, however, came with warnings about the potential impact of future US energy policy on drilling in the region and beyond.
The warnings come after three Democrats competing to run as president in the 2020 election voiced their opposition to hydraulic fracturing. Kamala Harris, Bernie Sanders and Elizabeth Warren have all called for the use of the technique to be halted in response to environ- mental concerns. Warren went further, saying in a tweet in September that she would ban fracking “everywhere” on her first day as president if she were to be elected.
“I think any effort obviously to ban fracking would have a negative impact on industry efforts to develop resources like the Permian,” Hansen said on the company’s earnings call. “There is no doubt on that, but when you look at the moti- vation of those policies, I mean, if the underly- ing concern is about risk of climate change and emissions reduction, we certainly share similar concerns. But we think [there] are more effective policies and we also think there are technology advances that are required,” he added.
Hansen went on to argue that if fracking were banned in the US, producers would simply turn elsewhere to develop resources for which they believe there will still be demand. “I think any
efforts to ban fracking or restrict supply will not remove demand for the resource,” he said. “If anything, it will shift the economic benefit away from the US to another country and potentially impact the price of that commodity here and globally.”
Similar sentiments were echoed by Chevron executives. Chevron’s executive vice-president for upstream, Jay Johnson, noted that the use of fracking had unlocked “huge” economic bene- fits for the US, and had been carried out safely in millions of wells, both domestically and globally.
Questions are already being asked about how realistic a fracking ban would be in the event that Warren or another opponent of the technique does win the presidential election. It appears most likely that any such ban – if it even man- ages to make its way into law – would be easiest to impose on federal land, whereas most shale drilling takes place on private land.
Indeed, Johnson noted how little of Chevron’s acreage in the Permian a fracking ban on fed- eral land would affect. “If you look at it from our company’s standpoint, we have less than about 10% of our Permian unconventional acreage that is on federal land, and all of that is in new Mex- ico,” he said. “So from a relative standpoint, well, we would not like to see any kind of restrictions on hydraulic fracturing – that’s the context for our company.”
Nonetheless, the fact that analysts on both companies’ earnings call were asking about the potential impact of a fracking ban – and the super-majors were both commenting on it pub- licly for the first time – illustrates that the threat is being taken into consideration by the industry. And the stakes in the presidential race could well be higher for shale drillers, depending on which Democratic candidate is ultimately selected.™
I think any efforts
to ban fracking
or restrict supply
will not remove
demand for the
resource.
Neil Hansen
Vice-President of Inves- tor Relations ExxonMobil
Elizabeth Warren
is among those Democrats hoping to run for the presidency that has called to ban hydraulic fracturing.
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